Assume that on January 1, 2023, Purple Company purchases equipment from Yellow Company. To finance the purchase, Purple Company signs a five-year note to Yellow Company that has a principal of $200,000 and calls for an annual interest rate of 2 percent, or $4,000 per interest period. A 10 percent rate is a realistic interest rate. Using the effective interest method of amortization.

What is the amount of interest expense for the year ended December 31, 2023?

Answer rating: 100% (QA)

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